Perth has become the major battleground in the demolition derby between global and national law firms in Australia. Justin Whealing looks at how three very different firms attempt to stay clear of the carnage

Squire Sanders wasn’t subtle about how it entered the Australian legal market.

The American-based global firm pinched 14 of the 19 partners from Minter Ellison’s Perth office, as well as an additional 40-odd lawyers, and in October last year, it became the latest global firm with an office in Perth.

“DLA Piper, Norton Rose, Clifford Chance and Allen & Overy had all entered the local market, and it really made us stop and think about not just the current generation at the firm, but also the future generation,” said John Paulsen, who made the switch from being Minter Ellison’s Perth managing partner to being the Australian managing partner of Squire Sanders, when interviewed by Lawyers Weekly last October. “That made us think global, not national.”

The Perth legal market was certainly used to global firms making waves when landing in Perth.

Allen & Overy also took 14 partners from a top-tier firm – in its case, Clayton Utz – when establishing its Australian presence with offices in Sydney and Perth.

However, Squire Sanders was different in that it took the highly unusual step of starting an Australian practice with a single office in Perth, eschewing the siren call of the riches available in the banking and financial markets of Sydney and Melbourne.

“Western Australia was particularly intriguing for us,” said Jim Maiwurm, the global CEO of Squire Sanders, when interviewed by Lawyers Weekly last year. “Due to the significant amounts of trade that exists between WA and the rest of the Asia-Pacific region, we thought an office in Perth would sit very nicely with our position in Japan and China.”

While the rival partners in national firms often state that the arrival of Clifford Chance, Allen & Overy and Squire Sanders hasn’t made a difference – “because they are the same lawyers we competed against at Cochrane Lishman Carson Luscombe, Clayton Utz and Minter Ellison” is the oft repeated mantra from the national firms – the reality is they have made a difference, and they have taken work from national firms.

If you want proof, look at what happened just this month.

The two national legal titans of Blake Dawson and Mallesons Stephen Jaques became Ashurst and King & Wood Mallesons respectively.

Squire Sanders partner Duncan Maclaren, who is the Perth-based head of the firm’s global energy and resources practice, said that since leaving the Minters stable, the type of work he and the firm does in Perth has also changed.

“Most of the work we do is not panel based, while previously when we were at Minters, we did a lot of panel work, particularly with the large banks,” he says. “That is not work we are chasing at Squire Sanders. We are more interested in acting for borrowers and being on the project finance side of the transaction, which means that you are acting for large corporates that are borrowing money, and they usually don’t have panels.”

Some of the high-profile matters the firm has managed to land in WA include acting for Japanese companies in the $43 billion Gorgon project and for the Kuwait Foreign Petroleum Exploration Company on the $29 billion Wheatstone project.

Sharing the sandpit with out of town kids

The national firms that have resolutely remained independent have had to overhaul their strategy in the face of global competition.

Corrs Chambers Westgarth is one such firm that has been scarred recently by the implications of not having global offices.

Last month, the co-chair of its China group, Adam Handley, and fellow Perth-based partner, Richard Guit, left Corrs to join Minters, as that firm looked to bolster its severely depleted ranks after the Squire Sanders raid.

One of the main reasons that Handley and Guit left Corrs was due to Minters having offices in Beijing, Shanghai, Hong Kong and Mongolia.

“Those hires and the opening of our Mongolian office [in February] was driven from the strategy of strengthening the firm’s already strong energy and resources practice, to strengthen the Perth office and to strengthen the connections that we already have got and the work we have already garnered out of the greater China market,” said Minters chief executive partner John Weber.

Minters now has seven partners in Perth, and Weber said that by the end of the year, he hopes to have around one dozen partners.

Even though Minters raided Corrs to make its first lateral partner hires since the arrival of Squire Sanders, it is in a considerably stronger position than that of Minters.

It currently has 15 partners and another 51 lawyers on top of that, and has a client base that includes companies the calibre of Woodside, Fortescue Metals and the China Metallurgical Group Corporation (MCC). The firm is also acting for Gina Rinehart and her youngest daughter, Ginia, in the long-running litigation matter involving the mining baroness and her three eldest children.

In such a competitive market, how does Corrs try and differentiate itself from its rivals?

“We work pretty hard to get our staff and partners to know the different sectors they are operating in and know the clients and their business,” says Nick Ellery, a litigation partner with Corrs in Perth for over one decade. “The way legal issues and problems and disputes are viewed is often quite different from sector to sector, so usually clients like to know their lawyers know what they are talking about when they are looking at things a certain way or use certain terminology.”

A mid-tier national firm that has attempted to muscle in on the work being done by the likes of Corrs in Western Australia is Middletons.

It launched its Perth office in December 2008 via merger with local firms Salter Power and Franklyn Legal. Middletons managing partner Nick Nichola says the arrival of the global law firms has resulted in a “seismic change” in the whole Australian legal sector.

“It gives clients considerable choice now,” he says. “If you look at the Australian market, they now have the choice of a boutique firm, a mid-sized firm that has full-service capabilities, your true national giants, and now, global players.

Nick Ellery, partner, Corrs

“It means the client now has a plethora of choice, as does the talent.”

General counsel and in-house lawyers can now use that greater level of choice in the market as leverage with their external legal providers. Nowhere is that more apparent than in Perth, where price has become an increasingly important level of competitive differentiation.

“I don’t think the change in client buyer behaviour will go back to what it was previously, where law firms just happily ratcheted up their rates year-on-year and clients moaned about it but accepted it. I think that is a thing of the past,” says Nichola. “While it is factually correct to say that our charge-out rates would not be on the same level of the global firms or the large domestic players in Perth, we focus more on the value we deliver.”

It’s who you know, not what you know

The strength of personal relationships has always been an important facet in the client base for all law firms.

When 14 Minter Ellison partners switched to Squire Sanders, they took the bulk of their clients with them, despite the fact that Minters' name was much more well-known than that of the recent American arrival.

According to Nichola, personal relationships and connections are more important in Perth than any other city in Australia.

“The reason we went over there was that our assessment of the market was that it was mainly about relationships, as opposed to brand,” he says. “That is why Perth is probably the only jurisdiction, in my view, in the whole country where the boutique firms have been as successful as they have been.”

The Perth boutique firms have been so successful that a number of them have been acquired by global or national firms on the strength of their international client base.

Last year, Cochrane Lishman Carson Luscombe linked up with Clifford Chance, while a few months after that, leading energy and resources practice Blakiston & Crabb, whose client base includes Sundance Resources, was acquired by Gilbert + Tobin.

Despite those high-profile casualties, well-regarded local firms like Lavan Legal can still boast over 100 lawyers in Perth.

For Nick Ellery at Corrs, local connections have greatly assisted his practice. Even though he has spent time practising in Melbourne and Brisbane, the fact he went to school in Perth and completed his law degree at the University of Western Australia has given him a coterie of personal contacts to mine.

“People tend to know people through those sorts of connections, such as uni, and if they don’t know them directly, they know someone who knows them,” he says. “A number of big domestic clients work with a range of big firms and small local firms because they know and trust particular partners and practitioners, usually in particular areas of practice, so we do see a lot of that in Perth, which you might not see as much of in other places.”

While work at the senior level is often based on relationships, in the long term, the success or otherwise of a firm’s graduate recruitment program is a key component in the success of a firm.

In Perth, the competition for young talent is intense.

“It is not a problem getting good quality graduates, there are plenty of those coming through the market,” says Ellery. “It is much tougher to get good lawyers in Perth with some quality experience behind them. It is a really tough market in that sense.”

One person who intimately knows how desperate law firms are for experienced lawyers in Perth, at the senior associate level or below, is Doron Paluch.

Paluch is a director with legal recruiters Burgess Paluch, and he has been active in the Perth recruitment market for over a decade. He says that while many law firms are actively looking for talent, the standards by which Perth firms judge candidates is exceedingly high.

“I do get lawyers saying they want to go and work in Perth, because the media talks so substantially about the boom in Perth. Many lawyers seem to think, ‘Well, if I can’t get a job in Melbourne or Sydney, I will get a job in Perth’,” he says.

“It is not that easy, and if you can’t get a job in Melbourne or Sydney, you may not get one in Perth either.”

Paluch adds that due to the importance of personal relationships in Perth, many clients he deals with often prefer local lawyers, and that the experience gleaned with a firm in Perth stacks up just as well as it would with similar roles on the east coast.

“For most of my placements, I don’t go outside of WA,” he says. “Most of the lawyers I place in Perth are referrals I get from lawyers already in Perth, and very often it is lawyers from the same firm.”

With the capital and M&A markets slumping in Sydney and Melbourne, and the resources boom showing no signs of slowing down anytime soon, the importance of Perth to the national or international network of law firms will, like the cost of living in the city by the Swan River, only continue to rise.